How do the phone companies make money?

August 19, 2008

Since I convinced our department head to pay for iPhone 3Gs for all of us I’ve also served as a primary contact for helping people acquire and configure their iPhones for internal use. As a result, I’ve had a chance to witness / hear about numerous people’s interactions with the telcos. And from that experience I have a single question: how on earth do the phone companies make money?

Ok, technically I know how they make money: they charge $0.20 to deliver an SMS message that costs fractions of a penny to actually deliver. But they have to charge that much in order to make any money because from everything I’ve seen they are totally and monstrously incompetent. We’re not talking “Wow, you people suck”, we’re talking “You people pro-actively suck. You go out of your way to achieve new levels of suck-i-tude.”

A few examples:

The colleague who was told he had to upgrade to a new phone before upgrading to the iPhone because his old phone was too old.

The colleague who was told he had to call AT&T customer service by an AT&T representative while standing in an AT&T store. Said representative further explained that he was prohibited by his manager to talking to the phone customer service representatives himself, so my colleague had to make the call and relay what they were saying to each other.

The colleague who was told his old phone number wouldn’t work with the iPhone, so he needed a new number. But he could call customer service later to get the new number cancelled and the old number subsequently applied to his phone.

The colleague who was told she should be eligible for an upgrade but the AT&T store computer didn’t have the ability to flag her as eligible, so she’d have to call customer service.

The colleague who was told that he had a corporate account instead of a personal account, so he couldn’t get an iPhone unless he cancelled his corporate account, created a personal account, and then got the iPhone. When he agreed to those terms, the customer service rep proceeded to run a credit check to make sure he could get an account. Despite the fact that he’d been an AT&T customer for at least 5 years.

I seriously do not understand how the telcos manage to turn a profit in the face of such blatant idiocy. If I were the FTC I’d instigate monopoly proceedings on the grounds that they only way they could still be in business would be due to illegal protectionist practices.

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Telephone service seems to be a race for leader in incompetency. ATT’s tech service seems to be run by chimpanzees, and its phone reps are 5 to 1 both incompetent, rude, and useless. They seem universally incapable of even transferring a call to the correct department. Internet service is inoperable only a fraction of the time without considerable tinkering with the site and intervention from the DSL department.

So I ordered a magicJack. I’ve had it one day, and already they have misbilled me; charged me $19.95 when the offer to which I responded was for a 30-day FREE TRIAL. The billed me for a second year of service for which I didn’t ask, so the initial bill was huge. Tech Supporst is nonexistent, and they are gleefully rude, refuse to answer questions, and give a bogus Tech Support phone number. There is no one to whom you can escalate questions, and connectivity is very iffy. In my opinion, a scam.